Warehousing Warehousing are the activities involved in the design - PowerPoint PPT Presentation

Warehousing • Warehousing are the activities involved in the design and operation of warehouses • A warehouse is the point in the supply chain where raw materials, work-in-process (WIP), or finished goods are stored for varying lengths of time. • Warehouses can be used to add value to a supply chain in two basic ways: 1. Storage. Allows product to be available where and when its needed. 2. Transport Economies. Allows product to be collected, sorted, and distributed efficiently. • A public warehouse is a business that rents storage space to other firms on a month-to-month basis. They are often used by firms to supplement their own private warehouses . 116

Types of Warehouses

Warehouse Design Process • The objectives for warehouse design can include: – maximizing cube utilization – minimizing total storage costs (including building, equipment, and labor costs) – achieving the required storage throughput – enabling efficient order picking • In planning a storage layout: either a storage layout is required to fit into an existing facility, or the facility will be designed to accommodate the storage layout.

Warehouse Design Elements • The design of a new warehouse includes the following elements: 1. Determining the layout of the storage locations (i.e., the warehouse layout). 2. Determining the number and location of the input/output (I/O) ports (e.g., the shipping/receiving docks). 3. Assigning items (stock-keeping units or SKUs ) to storage locations ( slots ). • A typical objective in warehouse design is to minimize the overall storage cost while providing the required levels of service.

Design Trade-Off • Warehouse design involves the trade-off between building and handling costs: min Building Costs vs. min Handling Costs   max Cube Utilization vs. max Material Accessibility 120

Shape Trade-Off W = D D vs . D W = 2 D I/O I/O W W Square shape minimizes Aspect ratio of 2 (W = 2D) perimeter length for a min. expected distance given area, thus minimizing from I/O port to slots, thus minimizing handling building costs costs 121

Storage Trade-Off B B C E Honeycomb loss vs . A B C A B D A B C D E A B C Maximizes cube utilization, Making at least one unit of but minimizes material each item accessible accessibility decreases cube utilization 122

Storage Policies • A storage policy determines how the slots in a storage region are assigned to the different SKUs to the stored in the region. • The differences between storage polices illustrate the trade-off between minimizing building cost and minimizing handling cost. • Type of policies: – Dedicated – Randomized – Class-based 123

Dedicated Storage • Each SKU has a predetermined number of slots assigned to it. • Total capacity of the slots C C B assigned to each SKU must equal the storage space corresponding to the A maximum inventory level of each individual SKU. I/O • Minimizes handling cost. • Maximizes building cost. 124

Randomized Storage • Each SKU can be stored in any available slot. • Total capacity of all the slots must equal the storage space corresponding to the ABC maximum aggregate inventory level of all of the SKUs. I/O • Maximizes handling cost. • Minimizes building cost. 125

Class-based Storage • Combination of dedicated and randomized storage, where each SKU is assigned to one of several different storage classes. BC • Randomized storage is used for each SKU within a A class, and dedicated storage is used between I/O classes. • Building and handling costs between dedicated and randomized. 126

Individual vs Aggregate SKUs 10 Dedicated Random Class-Based A 9 B Time A B C ABC AB AC BC C 8 ABC 1 4 1 0 5 5 4 1 2 1 2 3 6 3 4 5 7 3 4 3 1 8 7 5 4 4 2 4 0 6 6 2 4 6 5 0 5 3 8 5 3 8 Inventory 5 6 2 5 0 7 7 2 5 7 0 5 3 8 5 3 8 4 8 3 4 1 8 7 4 5 9 0 3 0 3 3 0 3 3 10 4 2 3 9 6 7 5 2 M i 4 5 3 9 7 7 8 1 0 1 2 3 4 5 6 7 8 9 10 Time 127

Cube Utilization • Cube utilization is percentage of the total space (or “cube”) required for storage actually occupied by items being stored. • There is usually a trade-off between cube utilization and material accessibility. • Bulk storage using block stacking can result in the minimum cost of storage, but material accessibility is low since only the top of the front stack is accessible. • Storage racks are used when support and/or material accessibility is required. 128

Honeycomb Loss • Honeycomb loss , the price paid for accessibility, is the unusable empty storage space in a lane or stack due to the storage of only a single SKU in each lane or stack Vertical Honeycomb Loss of 3 Loads Wall Height of 5 Levels ( Z ) Down Aisle Cross Aisle W i d t h Depth of 4 Rows ( Y ) o f 5 L a n e s ( X ) Horizontal Honeycomb Loss of 2 Stacks of 5 Loads Each 129

Estimating Cube Utilization • The (3-D) cube utilization for dedicated and randomized storage can estimated as follows: item space item space = = Cube utilization ( ) ( ) honeycomb down aisle total space + + item space loss space  ⋅ ∑ N ⋅ ⋅ x y z M i  = i 1 , dedicated  TS D ( ) =  ⋅ CU (3-D) ⋅ ⋅ x y z M  , randomized  TS D ( )     M ∑ N i ⋅ ⋅ x y    = i 1  H   , dedicated  TA D ( ) = CU (2-D)    M  ⋅ ⋅ x y    H  , randomized  TA D ( )  130

Unit Load • Unit load : single unit of an item, or multiple units restricted to maintain their integrity • Linear dimensions of a unit load: x Width (Deckboard length) (Stringer length) Depth Stringer Deckboards Notch Depth (stringer length) × Width (deckboard length) y × x y × x × z • Pallet height (5 in.) + load height gives z : 131

Cube Utilization for Dedicated Storage Item Total Cube Storage Area at Different Lane Depths Space Lanes Space Util. D = 1 A A A A B B B B B C C C 12 12 24 50% A /2 = 1 A A B B C D = 2 12 7 21 57% A A B B B C C A /2 = 1 A B C D = 3 A B B C 12 5 20 60% A A B B C A /2 = 1 132

Total Space/Area • The total space required, as a function of lane depth D :     A A = ⋅ + ⋅ = ⋅ + ⋅ Total space (3-D): TS D ( ) X Y Z xL D ( ) yD zH      2   2      Eff. lane depth   TS D ( ) A eff = = ⋅ = ⋅ + Total area (2-D): TA D ( ) X Y xL D ( ) yD   Z  2  X = xL Honeycomb HCL A B C Loss Y = yD Y eff = Y+A /2 A B B C A A B B C y x Down Aisle Space A Storage Area on Opposite Side of the Aisle 133

Number of Lanes • Given D , estimated total number of lanes in region:  N  M  ∑ i , dedicated      DH  =  i 1 = Number of lanes: L D ( ) − −        D 1 H 1 + + M NH N       > , randomized ( N 1)  2   2       DH • Estimated HCL: A doesn’t occur because slots are D = A A 3 used by another SKU A A A 1 1 1 Probability: D D D × × × + + ( ) ( ) − − Unit Honeycomb Loss: 0 D 2 D 1 = ( )   − − D 1 D 1 D − 1 1 1 1 D 1 ( ) ( ) ( ) ∑   Expected Loss: − + − = + = = = = D 2 D 1 1 2 i 1       D D D D 2 2 134 = i 1

Optimal Lane Depth dD = • Solving for D in results in : dTS D ( ) 0 ( )   − A 2 M N 1 * =  +  Optimal lane depth for randomized storage (in rows): D 2 NyH 2     70,000 60,000 50,000 40,000 Space 30,000 20,000 10,000 0 1 2 3 4 5 6 7 8 9 10 Item Space 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 Honeycomb Loss 1,536 3,648 5,376 7,488 9,600 11,712 13,632 15,936 17,472 20,160 Aisle Space 38,304 20,736 14,688 11,808 10,080 8,928 8,064 7,488 6,912 6,624 Total Space 63,840 48,384 44,064 43,296 43,680 44,640 45,696 47,424 48,384 50,784 135 Lane Depth (in Rows)

Max Aggregate Inventory Level • Usually can determine max inventory level for each SKU: – M i = maximum number of units of SKU i • Since usually don’t know M directly, but can estimate it if – SKUs’ inventory levels are uncorrelated – Units of each item are either stored or retrieved at a constant rate   N M 1 ∑ i = + M   2 2   = i 1 • Can add include safety stock for each item, SS i – For example, if the order size of three SKUs is 50 units and 5 units of each item are held as safety stock   N −       M SS 1 50 1 ∑ i i = + + = + + = M SS 3 5 90         i  2  2  2  2     = i 1 136